Medicare Demonstration Projects Fall Short in Reducing Spending

Of 10 major demonstration projects aimed at enhancing the quality of health care and improving the efficiency of health care delivery in Medicare's fee-for-service program, most do not reduce Medicare spending, says a new report by the Congressional Budget Office (CBO).

CBO evaluated the outcomes of 10 demonstration projects that focused on disease management and care coordination or value-based payment. In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered.

Results from demonstrations of value-based payment systems were mixed. In 1 of the 4 demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries. Medicare's spending for those services was reduced by about 10% under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.

The report also provides several lessons learned. Programs that collected timely data on when their patients' health problems developed or became exacerbated and where they were treated seemed better able to coordinate and manage their patients' care. Furthermore, programs that smoothed transitions (for example, by providing additional education and support to patients moving from a hospital to a nursing facility or between a primary care provider and a specialist) tended to have fewer hospital admissions.

Substantial changes to payment and health care delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients, CBO says.

Comments

Very interesting report. I think one of the important recognitions is that going forwards there should be comparison groups of like service demonstrations lest we promote what did not work and not promote the ones that did contribute to cost reductions. Not surprisingly, education seemed to assist with decreasing hospital readmissions and that is something that we therapy and all health care professionals can take to
the bank.
Check out the latest Harvard Business Review for thoughts on health care cost reduction.

Posted by Matthew Mesibov,PT, GCS
on 1/20/2012 4:16 AM

I do not know if the current PQRS(I) program would fall into the category discussed above, but I would love to see the CBO examine the expense and value realized (or not realized)from this white elephant.